"Energy" is one of the most oft used words in common parlance in today’s world of environmentalists. And with good reason -- the whole world is energy in some form. Is it any wonder that investors are getting energized too? Let’s discuss these companies which are touted as superstars in the field of energy, for reasons of their recent profits and high trading volume, and decide for ourselves.
SandRidge Energy Inc (SD): This company, with a recent quarterly average trade volume of 11,903,100 shares, sure has been riding the upswing seen in oil as 2012 dawned. This stock is priced at around $8.50; the 52-week price range for SD is $4.55-$13.34. Its lucrative deal with the Madrid-based subsidiary of Repsol YPF SA (REPYY.PK), S.A., another leading energy company, has been closed as of most recent reports.
This has brought in $250 million in cash with another $750 million on its way in the form of a drilling carry over the next 3 years. This is in exchange for the transfer of an undivided 25% non-operated working interest in SandRidge's extension Mississippian play in western Kansas as well as an undivided 16% non-operated working interest in SandRidge's original Mississippian play.
With a market capitalization of $3.49 billion, this company’s price to earnings ratio is 15.21 and its earnings per share is $0.57. Its operating margin ratio is 49.64% and its profit margin is 21.46%. Contrast these figures with its competitor Apache Corporation (APA) in Houston, Texas. Apache stock is priced at $98, its share volume is just over 3 million, its price to earnings ratio is 9.52 and earnings per share is $10.3.
Petroleo Brasileiro SA Petrobras (PBR): This stock is priced at around $27.45, almost at the midway point of its 52-week parameters of $20.76-$42.75, with market cap ringing in at 179.04 billion, and average volume of 14,325,700. The sideways movement that has been noted for awhile now might be helped by the recent news of the commercial viability of a joint venture between this company, Repsol, and BG Group (BRGYY).
The price to earnings ratio is 7.99, with 33.61% gross margins and 20.29% operating margins. Its earnings per share is $3.23 versus its competitor BP plc (BP), which, priced at about $44.39 shows a price-earnings ratio of 6.14 and earnings per share of $7.22. The recent news from Nick Chavez that Venezuela would pretty much ignore the World Bank edict regarding the nationalization of Exxon Mobil’s (XOM) Cerro Negro Oil Project had a few companies shaking in their boots. Though Petroleo Brasileiro SA Petrobras has some offshore operations in Venezuela as well as 4 joint ventures in onshore fields, its focus being more in Brazil, all is well.
I would not buy this stock right now despite its impressive figures. The Venezuelan uncertainty would be a deterrent. If you like how risk tastes, go for it.
Kodiak Oil and Gas Corporation (KOG): With earnings per share of $0.18 and a price to earnings ratio of 54.42, this stock’s price is presently around $9.85, above the 52-week range of $3.59-$7.70. Its market capitalization is $2.06 billion and average volume is 6,508,480. Contrast this with Double Eagle Petroleum Company’s (DBLE) figures of -$0.04 for earnings per share, a strangely elusive price to earnings ratio, and a modest $81.23 million market capitalization, Kodiak does not need to lose any sleep.
Last we heard, Kodiak was cashing in on the boom in oil and natural gas liquids, having raised $650 million in November 2011 to continue injecting funds into its development of these in North Dakota. This share is considered by analysts to be a strong buy, with price slated to go up to even $13, all other factors being conducive.
Transocean Ltd. (RIG): With an average volume of 7,612,320, this stock’s price is about $40.93, way less than the average of its 52-week range of $38.21-$85.98. Its earnings per share is negative $1.25. Its market capitalization is $13.09 billion, and its price earnings ratio is 13.42. 2011 was not the best year for the world’s largest offshore drilling contractor.
Yes, one can be optimistic, but to predict an outright reversal of currents would be premature at this point. Especially given that its share dropped 40% in 2011, best to wait and watch with this one. Its competitor Noble Corporation (NE) is surely showing more noble results. Priced at approximately $30.73 with a $7.74 billion market capitalization, its earnings per share is $1.35 and price earnings ratio is 22.83, indicating investors’ faith in this company.
Yes, now, after glancing at NE, best to leave RIG be, until it starts to show vestiges of its former glory -- in part, at least.
Nabors Industries Ltd. (NBR): 7,316,310 has been its average share volume over 3 months. With a price of around $19.43 (52-week range being $11.05-$32.47) its price to earnings ratio is 14.06 and its earnings per share is $1.38. No ankle biter, this company, with a market capitalization of 5.58 billion. Ensco plc (ESV) comes close, with its price/earnings of 16.32 and earnings per share of $2.92, its market cap being $10.99 billion.
Nabor’s sale of exploration and production assets has more than monetary significance, having brought in a handsome $72 million: It has a sort of symbolic importance as well. The production assets were not creating income and thus, this shows good business strategy on the company’s part. More such sales are coming in 2012. Perhaps another reason why Nabors is garnering investor sentiment? Your guess is as good as mine. I would buy this stock, what with its reasonable price and good analyst reviews. But I wouldn’t be in any rush to do so.
There are definitely bright stars on the stock market horizon, but the brightest by far should be the light you steer towards. Good luck.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.